CPS' Beneby may get a sizable raise

Updated 4:39 pm, Friday, February 1, 2013

Executives at city-owned CPS Energy earn significantly less than their peers at other comparable utilities, according to the summary of salary survey commissioned by the utility's board of trustees.

The comparison, which the board is expected to make public at its meeting today, could lay the ground work for justifying a significant pay increase for current CPS CEO Doyle Beneby. His current contract with the utility runs through July, and the five-member board is scheduled to consider offering him a new contract at the meeting.

“We all agree — collectively as board members — that we have a rock star CEO who I would say has performed better than his peer groups over the last 2½ years — since he's been here,” board Chairman Derrick Howard said.

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He said Beneby has made several key moves. They include the purchase of a gas-fired power plant near Seguin that eventually will replace its aging Deely coal-fired plant; awarding a contract to build 400 megawatts of solar power generation; and forging “new energy economy” partnerships, which Howard said was responsible for bringing high-tech manufacturing jobs and education investment to the region.

Howard declined to discuss details of new contract offer, except to say it would include “some additional incentives.”

The survey — conducted by New York-based Towers Watson, a professional services firm — reviewed the salaries and other compensation for about 150 positions at CPS, held by roughly 1,800 employees. The consultant found that compensation for non-executive positions at the utility is comparable with their peers across the industry.

The Express-News did not have access to the data underlying the findings — one of which was that Beneby earns 70 percent less than his peers when accounting for wages, bonuses, long-term incentive plans, retirement and other pay.

The survey also found that CPS has fallen far behind when it comes to compensating its top executives, partly because it can't offer stock options or other sorts of long-term incentive packages like its investor-owned peers can.

CPS said it would provide more information about the survey's methodology at the board meeting today.

A Hearst Newspapers' investigation into the effects of deregulation on utilities across the country found that Beneby earns $1 for every $7 to $9 his private-sector counterparts earn. Between 2000 and 2011, the average CEO salary at investor-owned utilities grew by 150 percent to more than $6 million a year, a survey conducted by Longnecker & Associates showed.

“I think we've recognized that we've got to play on a little different field there. We can't match these kinds of salaries, we just can't do it,” said Trustee Ed Kelley, retired president of USAA Real Estate Co.

He said CPS was able to attract the sort of executive candidates it wanted — even with the pay differential — for a couple of major reasons: the quality of life in San Antonio, and the additional freedom and responsibility they would have at CPS compared to other investor- or privately-owned utilities.

“Given where we are in the marketplace and how well we compete, I think we've done a really good job,” Howard said.

Howard said trustees ordered surveys to ensure that pay at the utility, from executives down to line-workers and meter maids, is in line with industry norms.

The issue of executive compensation at CPS returned to the spotlight last year after WOAI-TV ran a series of reports questioning the legitimacy expense reports — for travel, entertainment and meals — filed by Beneby. He gave the utility $5,000 to cover the expenses and apologized to ratepayers.

Howard and Kelley acknowledged those questions will be raised again when details of their offer to Beneby become public today. It'll likely give him the opportunity to earn more than the $820,000 in salary and bonuses that he earned in 2012.

Both trustees said Beneby is well worth the money.

“A company of this size can spin out of control quickly if it doesn't have good leadership,” Kelley said. “You have to pay for that kind of leadership.”

Longtime CPS watchdog Tom “Smitty” Smith, the Texas director of Public Citizen, also said that he understood the criticism leveled at Beneby's pay, but agreed with Kelley and Howard's assessment.

“In order to get top-flight management, like Doyle Beneby has proven to be, you have to pay well,” he said. “This is one place where you don't want to end up being penny-wise and pound-foolish, because it's a major economic engine.”